Conservative MEP rejects veto on EU financial rules

Members of the European Parliament attend a debate on the EU-US interim agreement on the transfer of banking data to the US authorities from the SWIFT system in the fight against terrorism, in Strasbourg, February 10, 2010.

Reuters/Vincent Kessler

BRUSSELS Giving countries a veto over European financial regulation could lead to "disaster" when negotiating new laws, a British Conservative MEP said in remarks that shed light on what London may demand before accepting EU treaty change.

Under pressure from Conservative eurosceptics to win concessions before allowing Germany and others in the EU to change its basic law to enshrine fiscal controls, Prime Minister David Cameron has pledged to demand safeguards for financial services.

It is not yet clear what form this might take and some political analysts have speculated it involve a veto for Britain over any new regulations from Brussels that hurt London, Europe's financial capital.

EU rules on everything from hedge funds to bank capital have strained relations between Brussels and London, which worries that financial services business could migrate out of the EU.

Vicky Ford, a Conservative MEP who played a key role in negotiating recent financial law said such a veto would backfire, because it would be impossible to give it to the British alone.

"Given the importance of financial services to Britain it sounds like a good idea for the UK to have a veto, but if the cost of doing this would be to give every one of the 27 countries a veto, it could be a complete disaster for negotiating international financial regulation," Ford told Reuters.

Separately, she underlined Britain's interest in heading off plans for an EU tax on financial transactions, an idea proposed by Germany which Chancellor George Osborne recently demanded be "put to rest."

Such a tax, unlike typical financial regulations, would require all 27 EU member countries to agree, meaning Britain already can veto it.

"We need to focus on preventing one-size-fits-all legislation, especially proposals that would force business and jobs to leave the UK, such as the financial transaction tax."

"If the euro zone wants to introduce its own transaction tax, I think they would be crazy, but they are free to do it. The British prime minister has said 'no' and we have a veto on this."